Rich country health spending stalls

July 1, 2013

The world’s richest countries have continued to put a clamp on health spending as government struggle with mountainous debts tied to the global financial crisis.

Public and preventive health programs and out-patient services have borne the brunt of government austerity measures as spending on health stagnated in 2011 for a second consecutive year, an analysis by the Organisation for Economic Cooperation and Development has shown.

In an unprecedented development in the post-war era, government funding for health stalled in 2010, and OECD researchers David Morgan and Roberto Astolfi said evidence indicated that it continued to flat-line the following year.

“Since the onset of the economic crisis in 2008, health spending has stalled in many OECD countries after many years of continuous growth.

“For the first time since records began in 1960, health spending growth in real terms was, on average, zero in the OECD area…and preliminary estimates for 2011 for a limited number of countries suggest that the slowdown continued,” the researchers said.

Government austerity will have had a particularly pronounced effect on the health sector, given that public funding accounts for, on average, 75 per cent of total spending on health across the OECD.

The researchers found that although cuts to government health spending had been across the board, some key areas were hit particularly hard.

Public and preventive health programs were hit with the greatest average cuts in funding, but budget cuts to out-patients services have made the biggest overall contribution to reducing health spending.

According to the OECD study, most of the cutbacks have been achieved through a combination of holding back spending, reducing patient entitlements, rationing health services and tightening controls on wages, pharmaceutical prices and administrative costs.

While such measures may be effective in the short-term in helping contain health budgets and reduce the financial liabilities of heavily indebted governments, there are concerns that they may come at the expense of poorer population health and higher medical costs in the longer-term.

It can be hard to gauge the immediate effectiveness of public health campaigns, screening programs and vaccination campaigns, but the contribution they make to improved population health is considered to make a significant contribution to holding back future health spending.